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BrentinUtahsDixie wrote:
> For fun lets say that a child was day trading the SP500 and after he traded
> there was a 1000 point move against him and he and his guardians lost
> everything, home, cars everything of value.
>
> Do you still think that children should trade? If so I don't think that
> society would agree with you.
I'm not so sure that "society" would object, although this isn't really a valid
reason against it. Should minors require the consent of others to trade? This
isn't at all obvious. First, you don't have to be a child to trade foolishly,
or get a margin call. And, even if one objects to minors trading on margin,
this problem doesn't exist with cash accounts. It also could be claimed that
the child may not have the capacity to exercise the quality of judgment needed
to protect his or her best interests, perhaps ending up squandering an
inheritance or the like. This is one of the reasons trusts exist, however, and
it may be argued that if the child's benefactor, who in theory is supposed to
control the terms of the gift or bequest, had not deemed it necessary to place
such constraints on the child, believing that he or she was capable of deciding
these matters; and, regardless of the degree that this would be the case, it
still could be held that the benefactor would enjoy such a right, as one can
direct one's resources as one sees fit.
As far as a minor trading an account controlled by another, with the permission
of the principle(s), since principles can trade accounts however they like,
regardless of competence, this would include delegating others to make such
decisions, again regardless of competence of the person(s) they permit to do
so. This would include minors, of any age or trading ability.
Would it be prudent to allow this, though? This would depend on the particular
circumstances, most notably the importance of the capital being risked, and the
skill level of the young traders. However, in principle, these decisions are
no different from the everyday ones that surrounds trading, and certainly, we
have no place telling others how their funds should be used.
Regards,
A.J.
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